Country of Origin Requirements

At the global level there are no uniform or enforceable guidelines governing country of origin requirements. Apart from treaty obligations, which may be bilateral or multilateral, and excluding any obligations arising as a member of a customs union, for example, the European Community (EC), individual countries have considerable freedom in the following: the way in which a product acquires origin (for example, whether it is wholly, or partly processed); limits on the extent to which value is added in non-preference countries; and documentary requirements to establish origin. Additionally, further restrictions may be imposed on country-of-origin marking in the case of specific products that are being exported (for example, “Swiss” watches and watch movements).

In the EC there exist two broad rules determining rules of origin: preferential rules and non-preferential rules. The former allow most products originating in a preferential-partner country to be imported to the EC after little, if any, common external tariff. Such preferences apply to Norway, Iceland, Switzerland, and Turkey (pan-European partners) as well as to Egypt, Israel, Jordan, and Lebanon (pan-Mediterranean partners). These arrangements have been supplemented by a pan-Euro-Med cumulation agreement that helps manufacturers satisfy relevant origin rules provided they originate within the EC's preferential trading arrangements.

Non-preferential rules apply to imported products originating from countries for which the EC does not extend preferential arrangements. This includes Australia, Japan, and the United States. Products covered by non-preferential rules include those “wholly obtained or produced” in a single country (for example, extracted mineral products), and those whose production involved more than one country (for example, electrical and electronic goods). Where more than one country was involved in the production of a good, the originating country is defined as that in which the final major process was effected.

In the United States, it is a legal requirement that U.S. content must be disclosed on certain types of products, for example, motor cars, textiles, and woollen and fur products. The relevant legislation governing the description to be applied to each of these products is, respectively, the American Automobile Labeling Act, the American Textile Fiber Products Identification Act, the Wool Products Labeling Act, and the Fur Products Labeling Act.

However, in certain cases, North American Free Trade Agreement (NAFTA) override rules can be used if a NAFTA preference is claimed. For example, China is a producer of comforter shells and the down used to fill these shells. Both of these textile products are sent to Canada, where the down is inserted into the shells. Although China is the country of origin of the finished comforter, Canada, which is a NAFTA member, can claim duty preference and if this is successful, the country of origin of the finished comforter is recognized as Canada. However, a product comprising foreign components may be labeled “Assembled in the USA” when its assembly has occurred in the United States and this assembly represents a “substantial transformation.” It is also the case that certain qualified “Made in the USA” claims can be made. For example, “Made in the USA of U.S. and imported parts.” Such qualified statements are considered appropriate when the products that include U.S. content don't satisfy the criteria for making unqualified “Made in the USA” claims.

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